What Does It Cost to Build a Marketplace? Part 4: Retaining Users for Repetitive Deals

Logicify
Logicify
Sep 5, 2018 · 3 min read

In our previous articles, we already defined what a marketplace is, gave a basic features set and time estimation to build an online marketplace from scratch and discussed how important this is to manage your marketplace properly to retain existing users.

You could certainly restrict your users’ right to leave marketplace for repeated deals. Yet the forbidden fruit is tempting, so, instead of forcing the users to stay on your platform, make them comfortable staying for repetitive deals.

Think of a fair and user-friendly economic design for the deals by gradually lowering the commission rates. Upwork.com, for example, starts with 20% for the first $500 billed and drops to 5% after first 10K earned.

Other way to entoil your users is giving them effective and convenient communication and progress tracking tools (again, this is something Upwork.com already has). But — most importantly — offer value by your marketplace, and this would work as the best retaining strategy.

Building up a marketplace that offers value is not easy as administrators should first solve the eternal chicken-and-egg problem. To make the platform valuable, it should first accumulate a rich pool of users, but this takes value to attract them.

For buyers, marketplace value is not in technology per se but in access to the vetted, sorted, and organized pool of providers and safe money transfer.

For providers, marketplace value is in regular and perennial stream of projects.

Here are a few tips for increasing the value of your marketplace for both categories of users.

  • Protect user rights by the platform’s terms of use: no service buyers should be able to underrate a service provider out of sheer pet peeve; no service provider could get money for a poorly done project. There should be a clear-cut system of punishments and unbiased (alright, close to unbiased) dispute resolution.
  • Encourage diligent work among service providers to earn a better rating. This would be a win-win for both user categories: providers with higher rating get access to more and more projects, and buyers — to qualified and motivated workforce.
    Upwork.com came up with a great initiative to award active freelancers with a “Rising Talent” badge, which a) encourages such freelancers to keep up and b) prevents monopolization of service by a single provider with a high rating.
  • Offer goodies and personal approach. This could come up in different forms like loyalty program tiers, educative webinars, or personal account managers for active users.
    One of numerous Upwork.com goodies, for instance, is an option to form a freelance agency. Another benefit its users enjoy is a strong community (forum) where topic questions are discussed.

To make marketplace a better place to run business, place your users at the head. Care more about their comfort and convenience, not about the revenue. In the long run, these are users who make your marketplace a success or failure. At Logicify, we would be glad to make any of your business ideas come true


Originally published at logicify.com/en/blog on September 5, 2018.

Logicify

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Logicify

Software development company with technical focus on Python/Django and Angular. Est. 2010.

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